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Executive Summary

Bolar and its ex-President Lawrence Raisfeld and Vitarine and its President Roger Jordan stand charged with conspiracy in fixing the prices of their generic Dyazide (triamterene/hydrochlorothiazide) products under a Baltimore federal grand jury one-count felony indictment handed down Dec. 17. The indictment charges that: "For the purpose of the forming and carrying out the charged combination and conspiracy, the defendants and co-conspirators did the following things, among others: discussed at meetings or on the telephone the range of prices at which Bolar and Vitarine would sell generic Dyazide to various customers; agreed to the range of prices at which Bolar and Vitarine would sell generic Dyazide to various customers; discussed at meetings or on the telephone the allocation of certain customers that purchased generic Dyazide; allocated a Bolar customer that purchased generic Dyazide to Vitarine; [and] entered into an 'exclusivity' agreement with a drug testing laboratory located in the state of Maryland for the purpose of eliminating competition in the sale of generic Dyazide." The indictment covers the period from February 1988 through April 1989. During that time, Bolar and Vitarine were the only companies with approved generic triamterene/hydrochlorothiazide products. "During the conspiracy, Bolar sold over $65 mil. and Vitarine sold over $10 mil. of generic Dyazide," the Justice Department said. Bolar's generic Dyazide was distributed by Schein and Rugby-Darby. On Dec. 18, former Bolar President Robert Shulman pled guilty to a Sherman Act violation in Baltimore federal court. Shulman was charged Dec. 9 for his role as a co-conspirator in the Dyazide price-fixing scheme ("The Pink Sheet" Dec. 14, T&G-5). Shulman's sentencing on the price-fixing charge is scheduled for Jan. 22. He will also be sentenced on five counts of conspiracy, wire fraud, false statements to FDA and obstruction of an agency investigation. Shulman pled guilty to the FD&C Act violations in November 1991 ("The Pink Sheet" Nov. 11, 1991, p. 17). Mark Perkal, PhD, a former exec at PharmaKinetics, the contract testing lab for Bolar's generic Dyazide, pled guilty in June 1991 to permitting Shulman and former Bolar Exec VP Jacob Rivers to switch samples of the drug at the lab just prior to a June 1989 visit by FDA investigators. Instead of submitting its generic Dyazide for testing, Bolar had submitted the innovator product, SmithKline's Dyazide. Vitarine also switched the innovator Dyazide for its generic version for bioequivalence testing. Early in the generic drug hearings, Jordan and Seymour Hyden, Vitarine's exec VP-technical affairs, portrayed the company as a victim of deception by former employees, including VP-R&D Steven Colton, PhD. Colton was sentenced to 27 months in prison for making false statements and illegally substituting six innovator drugs for Vitarine's generic versions in submissions to bioequivalence testing labs, including PharmaKinetics. During the period covered in the indictment, Raisfeld was Bolar's secretary-treasurer. On Dec. 11, Bolar announced Raisfeld's resignation as president and CEO, effective Jan. 31, saying the move was "not connected to the generic drug scandal or to recent anti-trust investigations." Raisfeld was set to remain VP-finance and a director ("The Pink Sheet" Dec. 14, T&G-5). A co- founder with Shulman, Raisfeld became president when Shulman resigned in February 1990 because of the fraud charges. Raisfeld previously had been the chief financial officer. Melvin Sharoky, MD, was named as the new president and CEO. Sharoky had been VP- scientific affairs. He also was named to the board. The maximum penalty that Raisfeld and Jordan could receive for a violation of the Sherman Act is three years in jail and "a fine that is the greatest of $250,000, twice the pecuniary gain derived from the crime, or twice the pecuniary loss caused by to the victims of the crime." For a corporation, the maximum penalty is the "greatest of a $1 mil. fine, twice the pecuniary gain the corporation derived from the crime, or twice the pecuniary loss caused to the victims of the crime." In March 1991, Bolar pled guilty to 20 counts of fraud and agreed to pay a $10 mil. fine.

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